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Dollar Higher, Japanese Stocks Down

June 3, 1999

TOKYO (AP) _ Renewed rumors that China may devalue the yuan pushed the dollar higher against the yen today. Tokyo share prices dropped on profit-taking after a three-day rise.

The dollar bought 121.54 yen at late afternoon, up 1.00 yen from late Wednesday in Tokyo and also above its late New York level of 121.33 yen overnight.

The benchmark 225-issue Nikkei Stock Average lost 190.49 points, or 1.16 percent, closing the day’s trading at 16,227.50 points. The index had gained 9.49 points, or 0.06 percent, on Wednesday.

In currency dealings, the dollar’s advance in Asia came after market rumors that China might devalue the yuan emerged once again.

The People’s Bank of China, China’s central bank, reaffirmed the government’s commitment to a stable currency, with a spokesman dismissing market talk of plans to devalue the yuan as ``rumors.″

Officials in Beijing have repeatedly pledged not to devalue its currency, more than a year of market rumors to the contrary.

Another factor supporting the dollar was a report in the Japanese Nihon Keizai newspaper today that the Bank of Japan, Japan’s central bank, will keep a zero interest-rate policy until clear signs of a broad rise in prices emerge.

The greenback’s strength also derived from a belief among investors that the U.S. Federal Reserve will raise interest rates to cool the economy, traders said. Higher interest rates make a currency more attractive to investors.

The dollar ranged between 121.55 yen and 121.99 yen in today’s trading.

In other currencies, the euro was quoted at 125.95 yen, up from 124.78 yen late Wednesday in Tokyo.

On the stock market, the Nikkei index dropped as investors took profits following three straight days of gains. There were few incentives to motivate buying.

Volume on the exchange’s first section was estimated at 396 million shares, down from Wednesday’s turnover of 434 million shares. Decliners outnumbered advancers 794 to 373, with 128 issues unchanged.

Some market players retreated to the sidelines waiting for U.S. employment data, due out Friday in Washington, for clues on the direction of U.S. interest rates and stock prices, traders said.

The broader Tokyo Stock Price Index of all issues listed on the first section was down 9.08 points, or 0.68 percent, to 1,317.69. The TOPIX closed up 9.29 points, or 0.71 percent, the day before.

The yield on the benchmark No. 213 10-year Japanese government bond fell to 1.6100 percent from Wednesday’s finish of 1.6700 percent, driving its price up to 99.19 yen from 97.68 yen.

Update hourly